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Boeing pays Alaska Airlines $160 million in compensation for the blowout of a panel during flight

An Alaska Airlines Boeing 737 Max 9 awaits inspection at the airline's hangar at the Seattle-Tacoma International Airport, Jan. 10, 2024, in SeaTac, Wash.
Lindsey Wasson
An Alaska Airlines Boeing 737 Max 9 awaits inspection at the airline's hangar at the Seattle-Tacoma International Airport, Jan. 10, 2024, in SeaTac, Wash.

Alaska Airlines says Boeing has paid the carrier $160 million in “initial compensation” for a panel that blew out of an Alaska Boeing 737 Max 9 jetliner in January.

The airline said Thursday that it expects additional compensation, the terms of which it said are confidential.

The payment covered Alaska's pretax loss related to the accident, including lost revenue and the cost of returning its Max 9 fleet to service after the planes were grounded for three weeks.

The airline described the compensation in a regulatory filing.

Boeing did not comment immediately.

A panel that plugs a gap left for an extra emergency exit blew off an Alaska Max 9 as it flew 16,000 feet over Oregon on Jan. 5. Pilots were able to land safely, and no one was injured.

Alaska quickly grounded its other Max 9s, and the Federal Aviation Administration followed by grounding all Max 9s in the United States – affecting Alaska and United Airlines. The FAA and National Transportation Safety Board are investigating, and the Justice Department is examining whether the incident violated terms of a settlement that Boeing reached in 2021 to avoid criminal prosecution for allegedly misleading regulators who certified Max jets for flights.

Alaska’s filing could foreshadow Boeing payments to other customers over the grounding and delays in production and delivery of new aircraft. United is asking pilots to take unpaid time off next month – a plea that the airline said could extend into the fall – because of delays in getting new planes that it ordered from Boeing.

Alaska said in Thursday's filing that it expects to lose between $1.05 and $1.15 per share for the January-March quarter, with 95 cents per share of the loss related to the accident. Analysts were expecting a loss of 86 cents per share, according to a FactSet survey.

“We have received initial compensation from Boeing to address the financial damages incurred as a result of Flight 1282 and the 737-9 MAX groundings,” the airline said. “As part of this compensation, Boeing paid Air Group approximately $160 million in cash during the first quarter. ... Additional compensation is expected to be provided beyond” the first quarter.

The Seattle-based airline said that without the blowout its first-quarter profit would have been better than its earnings in the same period of 2023.

Alaska said it saw strong demand for travel and further recovery of business travel on the West Coast.

“Although we did experience some book away following the accident and 737-9 MAX grounding, February and March both finished above” original expectations, the airline said.

Alaska Air Group shares rose more than 5% and Boeing gained nearly 2% in midday trading Thursday.

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